Iain Duncan Smith had bold plans for the Tories' spring conference at Harrogate. For weeks, he had been mulling over a speech that would outline the principles which would shape much of his party's policy-making between now and the next election. He is aware that he has yet to establish a clear political identity, and intended to use Harrogate to help put that right.

Margaret Thatcher had other ideas. Not for the first time she irrupted into one of her successors' party gatherings and distracted attention from the leader's own speech. This time, however, the intervention was involuntary and arose from a medical edict forbidding further public speeches. Let us hope that Lady Thatcher recovers sufficiently to have the option of disregarding her doctors' advice; it is hard to believe that the voice and the handbag have finally been decommissioned.

If they have, some Tories will experience a covert relief – but sadness will be a much more widespread reaction, which Mr Duncan Smith will share. He believes that the passage of time has made it possible to revere her legacy without being overshadowed by it. He has been happy to listen to her without feeling obliged either to agree with her or to repudiate her; her views are her views, his views are his.

He has now given the fullest account yet of those views. In one crucial respect – and despite his comments on Europe – they owe more to John Major than to Margaret Thatcher. One of Mr Major's animating passions – even though he never succeeded in conveying it to the public – was his anger at the way the social services failed the poor. As a youngster, trying to organise help for his parents, he experienced the clumsiness and rigidity of welfare bureaucrats, who seemed more interested in administering a kind of council-estate feudalism than in helping the poor to secure a full ration of human dignity. After his recent travels around Britain, Mr Duncan Smith is also aware that the welfare state is often an illfare state. He also tells us that he wants to empower people and their communities; to emancipate individuals from Whitehall's centralised authoritarianism. So did Mr Major, but all his radical and generous impulses carried him no further than the Citizens' Charter. Though Mr Duncan Smith may not realise it, he is picking up Mr Major's fallen banners.

In so doing, he is also committing himself to resolving the greatest paradox in modern British politics: the public services. They spend vast sums of the public's money, yet few of the public feel well served. The problem is easy to summarise: how to ensure that the taxpayer receives anything like the same value for money for each pound spent on his behalf by the so-called public services as he does from the pound that he spends on himself in the supermarket.

Tony Blair also thought it would be easy to deliver. In Opposition, he handled the politics brilliantly, persuading the British electorate that the Tories had virtually abolished public spending – when in fact they had spent like social democrats on a sailor's spree ashore. So the Tories bemoaned their misfortune; how could they spend £300bn a year and receive so little political credit?

Mr Blair reached a different conclusion. How could any government spend so much money without satisfying consumer demand? He assumed that it would be easy. Buoyed by public goodwill, he would twirl a few knobs, make a few cosmetic adjustments, and all would be well. He would then be re-elected ever after as the PM who invented public spending.

It has not worked out like that. Almost five years later, his own enthusiasm for British domestic issues palpably waning, Mr Blair is facing every difficulty that he blamed on the Tories – and he is no longer buoyed by public goodwill. So what happens now?

The answer will be determined by politics rather than by policies.Committed to radical reform, the Tories will have to hope that the voters are now ready to receive such a message. After all, sometimes Mr Blair too seems to have lost faith in the existing structures: when he and his ministers were flirting with radicalism. It should be possible for an Opposition to make the case that if a system is failing badly at huge expense, it must be time for fundamental change.

But Mr Blair will not make it easy for IDS to win that argument. Hoping that the public will have forgotten his excursions into radicalism, the Prime Minister will revert to Labour's traditional tax, spend and scare approach to the public services. Every time the Tories advocate an administrative change, Mr Blair will insist that this would mean paying to be sick or paying to send the children to school. You were thinking of voting Tory? Make sure that you apply now for the credit cards which the local hospital will accept.

Equally, every time Gordon Brown raises health spending – plus taxes to play for it – Mr Blair will demand a response from Mr Duncan Smith. Would the Tories match the money? If the answer is no, they do not believe in a properly funded health service. If they say yes, they have finally recognised the folly of calling for tax cuts – but of course, they are lying. These are well-rehearsed lines, and many voters still doubt the Tories' commitment to the public services. That said, a growing number of voters also doubt Mr Blair's ability to deliver. In a contest between two leaders' visions, a lot would depend on whom the voters believe to be more trustworthy. Mr Duncan Smith need not lose that contest.

In the autumn, he seemed to be making a slow start. This led some commentators, including me, to wonder whether he was up to it. He appeared far too calm; did he have any idea of the size of the task he had taken on? I am now convinced that those doubts were ill founded. The calm did not arise from incomprehension, but from confidence.

This is an unpolitical politician from an anti-political background; his father tried to persuade him not to go into politics. The late Group-Captain Duncan Smith distrusted politicians. He blamed them for the lack of preparedness for war in 1939. He regarded them as better at words than at deeds – and not necessarily honest words. No one could accuse Duncan Smith Jnr of those failings, and unlike his father, he believes that politics is a legitimate form of public service, if it is honestly conducted.

At the right moment, we will hear more about honesty. Mr Duncan Smith is genuine in his distaste for yah-boo politics. He is equally genuine in his belief that Mr Blair has lowered standards in British public life. IDS will shake his head in bewilderment at the contrast between Mr Blair's impressive bearing on international affairs, especially in Washington, and the cheap tricks he gets up to in Whitehall and Westminster.

But Mr Duncan Smith has a surer sense of his own political self than Mr Blair has, plus a much more certain grasp on principles and values. There is a final paradox. Despite the last two elections, Mr Blair still finds it hard to believe in his own luck. Deep down, he still lacks confidence in his rapport with the British people. His Tory opponent has no such doubts. Mr Duncan Smith's self-confidence knows few limits.